On July 15th, AH healthcare assets surged across the board. Popular on-market products, including the Medical ETF (512170), the Hong Kong Stock Connect Innovative Drug ETF (520880), the Hong Kong Stock Connect Medical ETF (159137), and the Pharmaceutical ETF (562050), all saw intraday gains briefly exceeding 5%, with closing gains significantly outperforming the broader market.

Hong Kong Stock Connect innovative drug stocks displayed high elasticity. The HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880), which invests 100% in innovative drug R&D targets, climbed as much as 6.35% intraday, closing up 3.81% with a daily amplitude of 6.5%. It saw heavy volume with turnover reaching 11.55 billion yuan.

IMMUNOTECH-B led the gains, rising 17.84%. Stocks like BioMap and Insilico Medicine surged over 10%. Major weighted leaders also posted substantial gains, with Akeso, Innovent Biologics, and Kelun-Botech all rising more than 7%.

The A-share pharmaceutical sector advanced in tandem, with innovative drug concepts showing strong momentum. Dizal Pharmaceutical's $600 million upfront BD deal continued to fuel buying, leading to a rapid 20% limit-up at the open! Boryung Pharmaceutical followed suit with a 20% limit-up. Heavyweight stock Hengrui Pharmaceuticals jumped 4.89%, while Allist Pharmaceuticals gained 6.15%.

The only on-market ETF tracking the pharmaceutical index, the Pharmaceutical ETF (562050), surged nearly 5% intraday, breaking through its annual moving average. It closed up 2.94%, marking its fifth consecutive session of gains, with a daily amplitude of 6.39%. Its turnover of 50.93 million yuan was the second-highest in its history.

Key Drivers for the Rebound

This rebound in innovative drug stocks, which began in late June, has formed a distinct "V" shape on the daily chart. What are the core catalysts? Recent positive developments have emerged from multiple fronts including policy, overseas expansion, and earnings.

1. Policy Support. The recent release of the "National Essential Medicine List (2026 Edition)" marked a significant breakthrough in selection criteria, with 16 innovative drugs being included on a large scale for the first time. This reflects strong policy support for innovative varieties with high clinical value.

2. Overseas Expansion Surge. In the first half of 2026, Chinese innovative drug companies secured a total of 81 out-licensing deals, with a total transaction value of approximately $110 billion. This already represents 80% of the full-year 2025 total, reaching a record high for the same period.

3. Earnings Delivery. Leading domestic pharmaceutical companies are establishing a positive cycle of "high R&D investment - rich pipeline - product commercialization - reinvestment in R&D." The proportion of revenue from innovative drugs is steadily increasing, and the overall profitability elasticity of the industry continues to be released.

Furthermore, capital rotation may be adding fuel to the innovative drug rally! The fund manager for the Hong Kong Stock Connect Innovative Drug ETF (520880) pointed out that this rebound may be driven by capital rebalancing, where sectors like innovative drugs—which previously experienced sharp declines but have continuously improving fundamentals—have become a "safe harbor" for funds with hedging needs (a "seesaw effect" between hard tech and non-tech lagging sectors).

Analysts also believe that Hong Kong Stock Connect innovative drug stocks, previously suppressed by overseas liquidity concerns leading to sustained corrections, have seen valuations fall to relatively low levels. They remain optimistic about the potential valuation repair opportunities for the overall Hong Kong-listed innovative drug sector driven by structural capital shifts.

How to Track the Rally

For investors looking to follow the innovative drug rebound, two key instruments are highlighted:

Hong Kong Stock Connect Innovative Drug ETF (520880): 100% invested in innovative drug R&D companies. Its top ten holdings account for over 70%, highlighting its focus on leaders. Its underlying assets are Hong Kong stocks, offering high elasticity and T+0 trading.

Pharmaceutical ETF (562050): The only ETF in the market tracking the pharmaceutical index. It features a unique allocation of "72% innovative drugs + 22% traditional Chinese medicine," combining the high growth potential of innovative drugs with the high dividend appeal of TCM.

Data is sourced from the Shanghai, Shenzhen, and Hong Kong stock exchanges, China Securities Index Co., Ltd., Hang Seng Indexes Company, and pharmaceutical databases.

Note: The mentioned ETFs do not charge sales service fees. When investors subscribe for or redeem fund units, the subscription/redemption agency may charge a commission of up to 0.5%, which includes related fees charged by stock exchanges and registration institutions. Detailed fund fee structures are available in respective fund legal documents.

Risk Disclosure: The index constituents mentioned are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings or trading动向 of any fund managed by the asset manager. The risk ratings for the Medical ETF and the Pharmaceutical ETF (and their feeder funds) are assessed by the fund manager as R3-Medium Risk, suitable for Balanced (C3) and above investors. The risk ratings for the Hong Kong Stock Connect Innovative Drug ETF (and its feeder funds) and the Hong Kong Stock Connect Medical ETF are R4-Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing herein is for reference only. Investors must be responsible for their own independent investment decisions. Furthermore, any views, analyses, or forecasts herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee the performance of these funds. Past performance of a fund is not indicative of its future results. Fund investment carries risks.